Violence by pro-Indonesian militias has hurled East Timor into chaos since its
overwhelming vote for independence was announced last week.

East Timor representatives have indicated endorsement of the Timor Gap treaty but
Petroz managing director Rod Brown said the company had advised shareholders that the
independence vote could lead to administrative delays in approving Bayu-Undan.

``It is our expectation that it will go according to the schedule,'' he told Reuters.
``But there is some uncertainty in East Timor at the moment, which could manifest itself
in some form of delay. We cannot quantify that delay.''

Brown said it was currently expected that approval for the liquids phase would be given
by the project partners and the Joint Authority for the Timor Gap Zone of Co-operation by
the end of the year.

The liquids project located in ZOCA blocks 91-12 and 91-13 is targeted to begin
production of 113,000 barrels per day of condensate and liquid petroleum gas by late 2003.

Petroz has an 8.25 percent stake in the project, while Phillips Petroleum Co (NYSE:P -
news) has the majority 50.29 percent stake.

The Australian government and oil companies operating in the Timor Gap are assuming
East Timor would take over Indonesia's role in the treaty with Australia if it gained
independence.

The treaty sets out revenue sharing and taxation arrangements between the governments
and petroleum companies.

Phillips Petroleum Co Darwin area manager Jim Godlove said the partners' main concern
was that the treaty remained in place.

``The treaty is still effective, an administrative regime is still in place, no
decisions regarding the change of sovereignty have been made so activity in the Zone of
Co-operation is continuing,'' he said.